[MARKET ANALYSIS] Crude rises on a US-Iran flare-up, but wanes off best levels amid no further escalation (thus far)

Overnight, the main geopolitical update has been the US-Iran flare-up. The US carried out new strikes near Bandar Abbas after accusing Iran of threatening maritime traffic in the Strait of Hormuz. Meanwhile, Iran responded with strikes on a US air base and claimed it forced vessels, including a US-linked tanker, to turn back in Hormuz. Air raid sirens sounded in Kuwait as Kuwaiti air defences intercepted hostile missiles and drones.
Despite this, efforts for negotiations are seemingly continuing. As a reminder, the US rebuffed the unofficial MoU released by Iranian State Media (which suggested Iran and Oman are to manage the Strait of Hormuz). President Trump continued signalling negotiations were progressing, while reiterating there would be no sanctions relief tied to uranium concessions. Also notable, Trump issued a threat to Oman, suggesting Oman would “have to behave or we will have to blow them up”.
WTI Jul and Brent Aug futures rose to highs of around USD 92.50/bbl and USD 96.00/bbl, respectively, amid the skirmish. Prices have since waned off highs back to around USD 90.75/bbl and USD 94.50/bbl respectively amid a lack of further attacks and with nothing to suggest negotiations are not still intact. Dutch TTF similarly rose above EUR 48/MWh before settling around EUR 47.50/MWh at the time of writing, +2.5% intraday.
Spot gold and silver are softer but off lows, in tandem with price action across energy. Spot gold briefly dipped under its 200 DMA (USD 4,394/oz) and trades towards the lower end of a USD 4,366-4,462.58/oz range. Traders may be looking ahead to the US PCE metrics as a source of impetus. Following hotter-than-expected CPI and PPI reports, analysts’ updated econometric models now point to April core PCE inflation of +0.3-0.4% M/M, up from the prior +0.3%. That being said, a major geopolitical update could overshadow the data in this fluid environment.
Base metals are mostly softer, and to varying degrees, with price action somewhat muted given the lack of macro newsflow. Overnight, copper extended declines amid the downbeat mood in Asia following reports of the US and Iran's retaliatory strikes, but clambered off its worst levels since. 3M LME copper resides towards the top end of a USD 13,465.80- 13,595.97/t range.